JERUSALEM: Israeli Prime Minister Benjamin Netanyahu apologised Friday to Turkey for a deadly flotilla raid and announced a full resumption of diplomatic ties as well as compensation for the families of those killed.

The breakthrough, which ends a nearly three-year diplomatic rift, was engineered by US President Barack Obama at the tail end of a historic three-day visit to the Holy Land, the first of his presidency.

Speaking soon after Air Force One departed for Amman, a senior US official said the Israeli leader had apologised to his Turkish counterpart Recep Tayyip Erdogan in a special telephone call from Ben Gurion airport near Tel Aviv.

"On behalf of Israelis he apologised for any deaths those operational mistakes might have caused," the official said.

"Prime Minister Erdogan accepted the apology on behalf of Turkey," he added, saying Obama had also spoken with the Turkish leader.

Israel and Turkey both confirmed the apology, with Netanyahu's office announcing a resumption of full diplomatic ties between the former close allies.

A source close to the Turkish government also confirmed the breakthrough. "Apologies have indeed been offered," he told AFP.

Ties between Israel and Turkey spiralled in May 2010, when Israeli commandos staged a botched pre-dawn raid on the six-ship flotilla to Gaza headed by the Mavi Marmara, in which nine Turkish nationals were killed.

The assault triggered an international outcry and a bitter diplomatic crisis between Israel and Turkey, with Ankara demanding a formal apology and compensation for the families of the victims.

Until now, Israel has refused, in part for fear that it could open the way for the prosecution of commandos who took part in the raid.

A senior official in Netanyahu's office said the two leaders spoke and "agreed to return normalisation between the countries including returning ambassadors, and cancelling legal procedures against IDF (army) soldiers," referring to the high-profile trial in absentia of four top Israeli military chiefs by an Istanbul court that opened in November.

Netanyahu's office confirmed the apology and compensation payment.

The Israeli leader "made clear that the tragic outcome of the Mavi Marmara incident was not intended by Israel and that Israel regrets the loss of human life and injury," it said in a statement.

"In light of Israel's investigation into the incident which pointed to a number of operational mistakes, the Prime Minister expressed Israel's apology to the Turkish people for any mistakes that might have led to the loss of life or injury and agreed to conclude an agreement on compensation/nonliability."

Netanyahu also "regretted the recent deterioration of relations between Israel and Turkey" and "expressed his commitment to overcoming their differences in order to advance peace and stability in the region."

The premier also noted he "appreciated" Erdogan's interview this week in the Turkish leader said there had been a misunderstanding about comments he made branding Zionism "a crime against humanity."

He also addressed the question of Israel's blockade on Gaza, which has been in place since 2007 but significantly eased in recent years.

Netanyahu further noted in his conversation "that Israel had substantially lifted the restrictions on the entry of civilian goods into the Palestinian territories, including Gaza, and that this would continue as long as calm prevailed," said the statement.

"The two leaders agreed to continue to work to improve the humanitarian situation in the Palestinian territories."

Hamas, which rules Gaza, said the apology "showed Israel's fear of the regional changes".

"Netanyahu's apology was late, and he should immediately end the siege on Gaza," spokesman Taher al-Nunu told AFP.

Former foreign minister Avigdor Lieberman, who for years opposed an Israeli apology, called Netanyahu's move a "grave mistake".

"Such an apology demoralises IDF soldiers," said Lieberman, who now heads the parliamentary foreign and defence committee.

Justice Minister Tzipi Livni praised the apology as "very important and correct".

"At this point in time, especially in the wake of the events in Syria, there are security interests shared by Israel, Turkey and the US," she wrote on Facebook.

The army chief of staff Benny Gantz welcomed the move, and hoped it would boost the countries' security and strategic ties.

Newly sworn-in defence minister Moshe Yaalon, who in the past was opposed to an official apology or direct compensation, on Friday supported the apology, his spokesman told AFP.